And before we get into the substance, the economic backdrop, the policy, I want to pick up on the more assertive stance, the more aggressive posture, if you will, that chairman Pal seems to be taking this year to defend central bank independence. I'd love your reaction to that and whether you believe he'll carry that into the news conference tomorrow afternoon. >> Yeah, good morning, Jonathan. I think uh the chairman had to take this move. I think we have been dancing around these threats uh to independence ...

Corporate Developments - Netflix (NFLX) stock declined after the company's quarterly results failed to impress investors, indicating a challenging environment for earnings reports as S&P 500 companies' earnings beats are met with historically poor share-price reactions [6] - A busy earnings season included reports from Johnson & Johnson (JNJ), Charles Schwab (SCHW), and other mid-sized financial institutions, highlighting the mixed performance across sectors [6] Market Reactions - The Dow Jones Industrial Average rose approximately 1.2%, gaining over 550 points, while both the Nasdaq Composite and S&P 500 also increased by about 1.2%, with the S&P 500 turning positive for the year following these gains [2] - Stocks experienced a surge in the afternoon after President Trump's announcement regarding a framework for a deal on Greenland, which alleviated some market fears [3][4]

Supreme Court weighs whether President Trump can fire Fed Governor Lisa Cook, a move that could spell the end of the US central bank's independence. Follow live updates. https://t.co/I90cqRBhVC https://t.co/rKIkSRfXzL ...

Core Viewpoint - The Federal Reserve has lowered interest rates by a quarter of a percentage point to a range of 3.5% to 3.75%, marking the third rate cut of the year, amidst ongoing speculation about the future leadership of the Fed under President Trump's influence [1]. Group 1: Leadership Changes - Jerome Powell's term as Fed Chair ends on May 15, and it is likely that President Trump will nominate a successor before that date [2]. - Powell's 14-year term as a governor extends until January 31, 2028, which may influence his decision to remain in his role [2]. - Historical precedent suggests that outgoing Fed chairs typically leave their governor roles, but Powell may choose to stay if he perceives threats to the Fed's independence [3]. Group 2: Political Influence - President Trump has been increasingly vocal about his desire to control the Fed, criticizing Powell and advocating for presidential consultation on interest rate decisions [4]. - Speculation exists that Trump's potential further control over the Fed Board of Governors could motivate Powell to remain in his position [5]. - The Justice Department's investigation into Powell has intensified speculation regarding his future, with Powell labeling the related subpoena as a "pretext" for Trump's influence [5]. Group 3: Other Fed Officials - Krishna Guha from Evercore ISI suggests that the current political climate makes it more likely that Powell and other Fed officials, such as Governor Michael Barr, will stay on after May [6]. - Barr's term extends to 2032, but there were discussions about his potential departure, especially after he left his supervisory role to avoid being replaced by Trump [7]. - Philip Jefferson, vice chair of the Federal Open Market Committee, also faces a decision regarding his position, which does not expire until January 2036 [8].

Core Viewpoint - Long-term U.S. government debt is experiencing a sell-off, leading to rising yields and a weakening dollar amid renewed trade war risks with Europe over Greenland [1] Group 1: Market Reactions - The 30-year Treasury yield is approaching 5%, while the 10-year yield stands at 4.3%, indicating a significant increase in long-term borrowing costs [1] - The two-year Treasury yield remains around flat, suggesting a divergence in market expectations for short-term versus long-term interest rates [1] Group 2: Legal and Regulatory Context - The U.S. Supreme Court has yet to make a ruling on the legality of former President Trump's extensive tariffs, which could have implications for trade and economic policy [1] - The Court is scheduled to hear arguments regarding Trump's ability to dismiss Fed governor Cook, a decision that carries significant implications for the independence of the Federal Reserve [1]

Core Insights - The potential nomination of Kevin Warsh as the next Fed chair could lead to a less aggressive approach to interest rate cuts compared to his rival Kevin Hassett [2][8] - Betting markets indicate a 60% chance for Warsh's nomination and a 15% chance for Hassett, following Trump's comments favoring Hassett's current position [3][4] - The selection of the new Fed chair is crucial as it will significantly impact monetary policy and the federal funds rate, affecting borrowing costs [5][10] Group 1: Candidates and Their Positions - Kevin Warsh has gained momentum as the front-runner for the Fed chair position, with Trump expressing a desire to keep Hassett in his current role [2][8] - Hassett is viewed as the most aggressive rate-cutter among the candidates, aligning closely with Trump's views on monetary policy [6][14] - Warsh, while advocating for lower rates, is perceived as less dovish than Hassett, indicating a potential moderation in rate-cutting policies [7][8] Group 2: Economic Implications - The new Fed chair will face the challenge of balancing a slowing job market against persistent inflation, which is currently above the Fed's 2% target [10][11] - Fed officials are expected to maintain steady interest rates in the upcoming meeting, with uncertainty surrounding future rate cuts [12][13] - Political pressures from the Trump administration regarding interest rate cuts could undermine the Fed's independence and credibility in managing inflation [13][14]

Core Viewpoint - The investigation by the Trump Administration into Federal Reserve Chair Jerome Powell appears to be failing in its intent to pressure the Fed into cutting interest rates, as multiple Fed officials have publicly defended Powell and the Fed's independence [2][5][10]. Group 1: Investigation and Response - The Trump Administration's Justice Department issued a subpoena to the Fed for information regarding Powell's June 2020 Senate testimony, which Powell has denied any wrongdoing related to [3]. - Several Federal Reserve governors and regional bank presidents have publicly supported Powell, emphasizing the importance of the Fed's independence from political influence [5][10]. - The pushback from Fed officials may lead to a reluctance to lower interest rates, as they may feel pressured by the Trump administration [6][10]. Group 2: Economic Implications - The ongoing conflict between Trump and Powell complicates the Fed's dual mandate of maintaining low inflation and high employment, adding complexity to the current economic environment [4]. - Traders have adjusted their expectations for interest rate changes, with a significant increase in the likelihood of the Fed keeping rates steady at its March meeting, rising from 58% to 78% following the investigation news [8]. - Experts suggest that maintaining higher interest rates could signal the Fed's commitment to combating inflation and preserving its independence from political pressures [6][10].

Core Viewpoint - The International Monetary Fund (IMF) emphasizes the necessity of maintaining the independence of central banks and expresses support for Federal Reserve Chair Jerome Powell amid ongoing investigations related to renovation cost overruns by the Trump administration [1] Group 1 - IMF chief Kristalina Georgieva highlighted the critical role of central bank independence in economic stability [1] - Support for Jerome Powell is significant as he faces scrutiny from the Trump administration regarding financial management issues [1]

Central Bank Independence - The Trump administration's actions are seen as a threat to the long-held consensus of central bank independence, which has been a cornerstone in developed economies for nearly 50 years [1][3] - Central bank independence is emphasized as crucial for financial and price stability, with warnings of potential structural rises in global inflation if the Federal Reserve's credibility is compromised [5][6] Political Pressure on the Federal Reserve - Fed chair Jerome Powell disclosed a criminal investigation into the $2.5 billion renovation of the Fed's headquarters, which he claims is a political attack due to the Fed's refusal to lower interest rates as pressured by Trump [2] - Global central bank leaders, including those from the Bank of England and the European Central Bank, have publicly defended Powell against these political pressures [2] Economic Vulnerability - Trichet highlighted a bipartisan consensus in the U.S. to increase spending, which contributes to economic and political vulnerability, as investors become cautious about financing deficits and high debt-to-GDP ratios [6] - The current level of debt as a proportion of GDP is reportedly higher than before the Lehman Brothers collapse, indicating significant economic vulnerability [7] Global Economic Implications - The potential subservience of the Federal Reserve to the executive branch could have damaging effects on global economic stability, with Trichet expressing concerns about the overall vulnerability of the global economy [8] - Citi warns that risks to central bank independence from populist governments could extend beyond the U.S., affecting global financial markets and policy decisions [10][11]

Economic Indicators - Core consumer prices rose 0.2% month-over-month in December, matching November's pace and below the 0.3% consensus, resulting in a year-over-year increase of 2.6%, slightly under the 2.7% forecast [2] - Headline CPI increased by 0.3% month-over-month and 2.7% year-over-year, aligning with monthly expectations but slightly exceeding annual forecasts, with shelter costs being the largest contributor at 0.4% [2] Central Bank Actions - Global central bank officials, including leaders from the ECB, BoE, BOC, and RBA, issued a statement supporting Fed Chair Jay Powell and emphasizing the importance of central bank independence for economic stability [5] Company Earnings and Guidance - JPMorgan Chase's stock rose after providing optimistic guidance for 2026, with net interest income expectations surpassing consensus and expenses projected to be in line [6] - Delta Air Lines guided 2026 EPS to a range of $6.50–$7.50, slightly below the $7.20 consensus, resulting in a slight decline in its stock [7] - Intel and AMD stocks gained after being upgraded to Overweight by KeyBanc, driven by strong demand for server CPUs amid increasing data center and AI needs [7] Mergers and Acquisitions - Denny's shareholders approved a $620 million buyout by TriArtisan Capital Advisors, which owns TGI Fridays and P.F. Chang's, along with Treville Capital and Yadav Enterprises [8] Industry Challenges - Wells Fargo issued a warning for cable operators, downgrading Charter Communications, Comcast, Altice's Optimum, and Cable One to Underweight, anticipating a loss of approximately 1 million residential broadband subscribers this year due to competition from fixed wireless and fiber [10][11]